ACCESS Family Business - February 2019

With David Pring

BUSINESS

WESTERN SYDNEY

WELCOME o KPMG Family Business ar icles or how KPMG can help wi h your ea ure ar icles, which I hope you enjoy business, please eel ree o con ac me on reading. I you would like o discuss hese 9455 9996 or davidpring@kpmg.com.au

Welcome Au omo ive Indus ry en ers ‘per ec s orm’ o CHANGE and uncer ain y n STEVE BRAGG OU don’ need o be a mo or indus ry specialis o know ha he Aus ralian and global au omo ive indus ries are acing major challenges.

In Aus ralia, his year is likely o see lower new car sales, higher in eres ra es (barring a recession), decreasing vehicle a ordabili y and con inued margin pressure orcing original equipmen manu ac urers (OEMs) o make radical changes, as evidenced by General Mo ors, Jaguar Land over and Ford, in heir produc lines and business models.

Such changes are global in heir ramifca ions or dealers as de ailed in he 20 h KPMG Global Au omo ive Execu ive Survey (link: htps://au omo ive-ins i u e.kpmg.de/?m=0).

Globally, and in Aus ralia, dealers are sharpening heir ocus on expenses, reducing bo h new and used inven ory and honing in on backend gross oppor uni ies.

Some are even considering selling heir business. O her acors, such as au onomous or elec ric vehicles, are all expensive gambles or au omakers and po en ially major disrup ors or car dealers.

In he pas six mon hs, he s ock prices o major au omakers, re ailers, and almos any company wi h close ies o he indus ry have signifcan ly underper ormed he broader marke averages.

Tere is also he possible nega ive impac o a looming general elec ion, which radi ionally sees consumers puting o signifcan purchases such as new cars. Never heless, despi e

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eroding indus ry condi ions and he poor s ock per ormance o he en ire sec or, here are oppor uni ies which dealers mus seize.

Te bigges oppor uni y dealerships can exploi is a more seamless re ail experience.

Ta means o ering a sales process similar o Google and Amazon – he way many o oday’s consumers pre er o shop.

Consumers expec 24/7 online availabili y, he abili y o ransac online and have heir vehicle delivered when and where is mos convenien , or click and collec rom a delivery cen re.

Dealers mus also o er ransparency in vehicle pricing and fnancing up ron . So no haggling and nego ia ing a deal.

Consumers also wan op ions o re urn he vehicle (e.g. wi hin 7 days and limi ed by 100 kilome res), similar o heir in eracions wi h o her online re ailers.

Tis has some signifcan challenges as car isn’ really ‘new’ wi h 100 kilome res on he clock. Bu he concep is cer ainly wor h considering.

Tey should also maximise cus omer oppor uni ies using heir C M da abase. arge ing curren cus omers whose cars are coming ou o warran y, in or 30,000 km service, or driving he previous model and ripe or an up-grade.

Las ly, dealerships should consider adap ing heir business model o par icipa e in he prof rom car loan fnancing ollowing new ASIC changes pu in place las year banning ex commissions be ween fnancial ins i u ions and car dealerships.

I he dealer becomes he lender, hey can se he ra e and hen discoun a he dealership. Tis allows more con rol over he process, grea er ransparency or he cus omer and dealerships can par icipa e in he prof s rom fnancing a vehicle. All o which con ribu es o a one s op shop or purchase.

Wi hou changes o dealerships opera ing model and everyday in erac ions wi h cus omers hey may well collapse under he disrup ion seen in o her radi ional re ail sec or. o learn more, please con ac David Pring on 9455 9996 or davidpring@kpmg.com.au.

First published by Steve Bragg, National Leader, Motor Industry Services, KPMG Enterprise

Global analysis of venture funding n AMANDA PRICE EN U E Pulse is a quar erly global ven ure capi al (VC) rends repor published by KPMG En erprise and KPMG's Global Ne work or Innova ive S ar ups. Te repor analyses he la es global rends in ven ure capi al inves men da a and provides insigh s rom bo h a global and Aus ralian perspec ive.

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Australian trends Ven ure capi al inves ed in Aus ralia hi a record US$899 million in 2018, up rom US$659.9 million in 2017, according o he Ven ure Pulse Q4 2018 repor .

During he las quar er o 2018, US$147.1 million o s ar up inves men was recorded in Aus ralia. Major unding deals included: • Depu y’s US$81 million Series B round.

• Nura’s US$21 million Series A round.

• Gilmour Space echnologies US$13.9M Series B round.

In he las quar er o 2018, 15 deals were made which is signifcan ly less han in Q3 when 41 deals were made wi h an inves men o US$325.16M in o he ecosys em. However, as Amanda Price, Head o High Grow h Ven ures commen s, "2018 was he bigges year ever or VC inves men in o Aus ralian s ar ups. For he frs ime we are s ar ing o see a s eady ow o major unding rounds over US$10M aimed a helping locally ounded businesses ake on global marke s. In Aus ralia he diversi y

o he s ar -ups being unded is es amen o he scale o he economy and oppor uni y."

Global trends Globally, he fnal quar er o 2018 saw nearly US$64 billion in VC inves men globally, led by a $12.8 billion unding round o US-based e-cigarete manu ac urer Juul. Te VC deal, second only o he $14 billion raised by China’s An Financial in Q2’18, helped propel annual VC inves men globally rom $175 billion in 2017 o $255 billion in 2018.

You can read he ull repor a www.kpmg.com.au First published by Amanda Price, Head of High Growth Ventures, KPMG Enterprise

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Success

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How Ian EFINED cus omer service o s unning new levels National Office asked me to talk to other franchisees about increasing sales. This went so well that after a while, I was asked to re-locate to Adelaide and roll out a national customer service program. In September, 2003, we rolled it out to 300 Wendy’s stores.”

“ - Ian Gallagher.

n DALLAS SHERRINGHAM AN Gallagher’s s ory o riumph over adversi y is a beacon o hope o every person s ruggling o overcome a lack o educa ion in s ar ing and running a business.

You see, Ian has reached he op o he corpora e ree in Aus ralia despi e he ac ha he has had a major obs acle o overcome – he can’ read or wri e.

I is a s ory ha needs o be old o every young kid s ruggling o ge hrough school and living wi h he ear ha hey will never ge anywhere because hey don’ have an educaion or a er iary qualifca ion.

I me Ian qui e by chance. One o his businesses is a ranchise o he Max Heal hcare Equipmen organisa ion and he provided me wi h an au oma ic bed a er I was recen ly released rom hospi al.

Now Ian wasn’ your ypical delivery guy who barges in, hrows he bed in a corner and disappears in a hu . He ook he ime o ins all i properly, explain how i worked and was he mos amenable supplier I ever me ...and I old him so.

Ta ’s when Ian began o ell me his amazing s ory. Ian’s s ruggle s ar ed a school when

I

My wife said: You don’t know anything about business! You’re the dumbest person I know - how can you possibly run a business?”

“ - IAN Gallagher.

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cus omer service program.

“In Sep ember, 2003, we rolled i ou o 300 Wendy’s s ores and Wendy’s was our per cen down on prof s a ha s age. I worked.

We finished he financial year a eigh per cen up.

“I s ayed wi h Wendy’s or he nex six years, elling anyone who would lis en, ‘I doesn’ mater abou he produc , i ’s abou how you rea your cus omers and s a ’.”

“I go headhun ed by Allied Brands, who owned Baskin obbins, Cookie Man and Kenny’s Cardiology. Tis was an oppor uni y o show ha my cus omer service cul ure could work in any business, no jus ood.... and i did.

he was nicknamed “Mumbles” because o a speech impedimen .

Ins ead o hiding away, Ian even ually embraced he name and i became his calling card and he now uses i or he name o his corpora e speaking company.

However ry has he may, he never learn o read or wri e and admi s he dri ed hrough school in Wes ern Sydney.

Life on the road

Ian Gallagher.

Lots of money “Like everyone, I wen o school, bu didn’ learn o read and wri e. I le school a 15 o become a bricklayer.

“One o he hings I loved abou bricklaying was ha I didn’ have o read or wri e, I jus had o work really hard o make money. I made lo s o money, because I worked really hard.

“I also loved he camaraderie o a building si e. Bu a er 20 years, all my bricklaying ma es were broken down: bad backs, bad knees, burn ou and old be ore heir ime.

“I was s ill prety OK, bu I didn’ wan o end up like hem, so, one day I had he brigh idea o buy a business. I wen home and said o my wi e Gillian: ‘I’m going o buy a business!’

“You don’ know any hing abou business! You’re he dumbes person I know - how can you possibly run a business?” she said, which was hardly inspiring.

“And anyway, wha kind o business would you buy? Well, I hough abou i and said: ‘I ake he kids o Wendy’s all he ime - I wan o buy a Wendy’s’.”

“Now, my wi e is a lo brigh er han I am.

She said: ‘OK’, bu she insis ed I couldn’ buy a Wendy’s because I loved i , bu because i was he bes business o buy.

“She made me look a he business model and compare i o o her ood ranchises like Baskin obbins, Donu King and Michel’s. I kep coming back o Wendy’s.

“You’re going o buy a Wendy’s, aren’ you?” said my wi e.

“Yes, I am,” I replied. “I love Wendy’s and I’m going o buy a business I love. So, I s ar ed looking around a Wendy’s s ores.”

Ian, Gillian and heir hree children lived in Wen wor hville a ha s age, bu he idea o a “Wen y Wendy’s” wasn’ ha appealing.

“Why are you looking around here?” Gillian said. “I you wan a li es yle change, we need o move away.”

Ian akes up he s ory: “Te nex weekend, here was a Wendy’s s ore adver ised or sale a Lake Haven on he beau i ul Cen ral Coas , a world away rom Wen wor hville in Wes ern Sydney.

“We wen or a look and ended up buying i . We paid way over he odds or i , bu ha didn’ mater. “Ta Wendy’s s ore had been in he cen re or 15 years, wi h 4 or 5 di eren owners.

“In he firs 12 mon hs, we doubled he urnover. So we bough a second s ore wi h a similar his ory and we doubled ha urnover in 12 mon hs, as well.

“Wendy’s Na ional O fice s ar ed asking ques ions abou wha we were doing? Te CEO and he COO came o have a look a he s ore o see wha was di eren abou i .

Customer service “I also s ar ed looking a he o her re ailers o see how I was di eren . I urned ou , when cus omers walked pas a re ailer, hey were jus walking pas or a reason.

“You see, when he cus omer came o he coun er he re ailer was jus poli e. When cus omers walked pas my coun er, hey go a wave and a gree ing. Ac ually, ru h be old, mos o he morning was very quie and I was bored and going crazy wi h no one o alk o.

“When hey came o he coun er, I rea ed hem like hey were impor an . A er a while, hey wan ed o come o see me and have a alk. And hey always bough some hing.

“Na ional O fice asked me o alk o o her ranchisees abou increasing sales. Tis wen so well ha a er a while, I was asked o re-loca e o Adelaide and roll ou a na ional

“However, he whole amily had even ually reloca ed o Adelaide o join me and we were all homesick or he Cen ral Coas . I'd managed o develop a na ionwide program called Mumbles Cus omer Cul ure ha I could run rom anywhere so we moved back home. I spen li erally years on he road: a frs i wasn' so bad, jus a week or wo a a ime.

“Bu i wasn' long be ore I was ravelling Monday o Friday and having weekends a home, especially when I wen ou on my own and ormed he consul ing business. My ocus in he Mumbles Cus omer Cul ure was always on he ranchisee/s ore manager and orming personal as well as business rela ionships.

I was working wi h na ional brands so ravel was unavoidable: phone and email jus didn' cu i .

“I el I was missing a lo - we had moved o he Coas rom Wen wor hville or a sea change and I wasn' seeing a lo o he beach or he amily, so when he oppor uni y came up o own and opera e a local heal hcare business las year I jumped a i .

“Te Max Heal hcare service works in per ec ly wi h my consul ancy. Mumbles is designed o help businesses develop and main ain a cus omer service cul ure ha changes people’s lives. I provide goals and oppor uni ies or people, and, mos imporan ly, I ge people involved in produc ive and respec ul rela ionships “I hink he idea o a breakou in o heal hcare is a good one. Max will be run as an independen , locally owned and opera ed business. I've already buil excellen rela ionships wi h Gos ord Priva e, Berkeley Vale Priva e and some o he major O companies on he coas .

I asked wha Ian’s bes business ip was?

“I 's all abou orming a rela ionship wi h he cus omer,” he said. “I migh be only a minu e or wo, bu in ha ime, he cus omer should be he whole ocus o your aten ion.

Invi e hem in, have a conversa ion, o er hem some hing and make a genuine arewell.”

WESTERN SYDNEY BUSINESS ACCESS FEBRUARY 2019

Balance brings success At KPMG Enterprise we believe that in a rapidly changing world, supporting family business is more important than ever.

The power of open communication, embracing the wisdom of all generations, and planning for the future can unlock your competitive advantage.

To ďŹ nd out how, talk to us today.

David Pring Partner, KPMG Enterprise davidpring@kpmg.com.au 02 9455 9996

Peter Tracey Partner, KPMG Enterprise petertracey@kpmg.com.au 02 9455 9144

Anticipate tomorrow. Deliver today.

KPMG.com/au/enterprise

Š 2018 KPMG, an Australian partnership. All rights reserved. September 2018. 258795324ENT.

WESTERN SYDNEY BUSINESS ACCESS FEBRUARY 2019

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